Four possible scenarios for the Russia-Ukraine crisis

[ "Blog: Latest Insights" ]
[ ]
[ "Joshua Kutin" ]
  • Our Blog
Joshua Kutin, Head of Asset Allocation, North America

Download PDF

What comes next? We detail four potential outcomes for the continued war in Ukraine.

With the war in Ukraine continuing to drag on, our asset allocation team has identified four possible outcomes for the crisis and evaluated their potential economic and broad market impacts. The analysis suggests that any scenario other than de-escalation could result in greater economic dislocation and market volatility. For investors, different outcomes can have meaningfully different impacts on asset allocation.

 

 

SCENARIO 1 

De-escalation 

SCENARIO 2

Prolonged conflict

SCENARIO 3

Russian escalation 

SCENARIO 4

Broadening to China
 

 

    

Possible outcomes

  • Russia yields to sanctions and leaves Ukraine

  • Within Russia, regime change leads to end of conflict

Possible outcomes

  • Prolonged engagement in Ukraine

  • Military action ends, but Russia sets up a new government within Ukraine

Possible outcomes

  • Sanctions expanded against Russia

  • Russia extends military operations into other countries

Possible outcomes

  • Formal retaliatory sanctions against China
  • China becomes more aggressive militarily
    • Military aid to Russia
    • Uses chaotic environment to introduce its own conflicts (e.g, Taiwan)

Macroeconomic outlook

Slower growth

Macroeconomic outlook

Slower growth

Stickier headline inflation from high oil prices

Macroeconomic outlook

Europe goes into a recession

Macroeconomic outlook 

Global recession

 

 

Download this article as a PDF